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Portland restaurant Ruby's West End cuts costs, adds service charge to pay employees more than minimum wage

The combination of cutting costs and adding the service charge enables her to pay all staff at least $20 per hour plus tips.

PORTLAND, Maine — A Portland restaurant is trying to retain workers during the pandemic by paying more than $20 per hour plus tips to every employee.

Corrinna Stum opened Ruby's West End in April 2021 with her husband, Matt.

For the first six months, Corrinna was in the kitchen. She said she just hired the first kitchen staff in the last four weeks. Like other restaurant owners, she has been struggling to hire during the pandemic.

In order to attract and retain staff, they took a unique approach to pay more. They cut some traditional restaurant costs, using donated table linens and washing them at the Soap Bubble, the laundromat next door to save money on a laundry service.

They also use a paper spreadsheet to manage reservations, instead of paying for a third-party website such as OpenTable. Paper menus are replaced by QR codes that people scan using their phones.

She said the measures took some time to get used to but did not hurt operations or cause additional costs.

"We've replaced those expenses in that category, and put them into our labor category," Stum said.

Stum did add a cost though, for customers: a 20% service charge.

The combination of cutting costs and adding the service charge enables her to pay all staff, both front and back of house, the same wages of at least $20 per hour plus tips.

"It created a fair environment," Stum said. "It's the right thing to do."

The minimum wage in Portland is $12.15 per hour, but service employees who receive more than $30 a month in tips, such as restaurant workers, can be paid a "sub-minimum wage" of $6.08 an hour. If a service employee’s direct wage and total tips do not equal or exceed $12.15 per hour, the employer must pay the service employee the difference. 

"When I'm being taken care of by my employer, and able to take care of myself and not worry every week on if I'm going be able to pay my Portland rent, I'm able to take care of the people that I care about," Olivia Shipsey, the restaurant's morning manager, said. "It makes it really easy to put your whole heart into it."

"That return on investment is just huge," Stum said. "We can all use that same creative energy to find a solution for wage and wage reform whether policy goes into place or not. I think anyone can use this model in a tip structure and get rid of that sub-minimum wage, pay them minimum wage with tips on top."

Stum said the benefit is symbiotic: staff do not need to rely on tips or a second job to pay their bills, and staff stick with her. She said in her more than 15 years working in the restaurant industry, none of her employers took an "employee-first" approach.

"After being in this industry for so long, and seeing how many people have been negatively affected by not making enough to live their life, just the joy that comes out of this restaurant is pretty cool," Stum said.

"Goodness begets goodness, and I think Matt and Corrinna invested in a good idea with good heart and I hope that they will see great success from it, and I think they will," Shipsey said.

Stum said the service charge can be waived, but that most people end up leaving larger tips in its place.

Watch the full interview with Corrinna Stum below:

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